Expanding Social Security Before We All Turn Gray

One of the most startling developments of the 2016 presidential race was the seemingly out-of-nowhere appearance of proposals to expand Social Security. When Sen. Bernie Sanders registered his proposal during his presidential campaign, the idea proved so popular that the designated center-right candidate, Hillary Clinton, decided to endorse some version of expansion, and candidates for Congress began talking up the idea as well.

‘Millenials are the first generation that’s lived their entire careers in a world of insecurity and constant change.’

Then Donald Trump won the presidency, the Republican Party firmed up its control of Congress, and Democrats largely (but not completely) stopped talking about Social Security.

And now you see it (again): As a result of last November’s election, expanding and updating Social Security is back in the forefront in Washington. In January, Reps. John Larson (D-CT) introduced the Social Security 2100 Act, which quickly gained the support of more than 200 House Democrats. A Senate version, sponsored by Sen. Richard Blumenthal (D-CT), soon followed.

Social Security is America’s biggest, most successful and most popular anti-poverty program, and the main pillar of what’s left of Washington’s social compact with working people. For the first time in more than 45 years, a bill to expand it has a strong possibility to pass at least one house of Congress. It’s unlikely to become law as long as Trump is president and the GOP control the Senate, but it’s now virtually guaranteed to be a major issue in the 2020 presidential election, which means it has a chance to build enough momentum to be enacted into law in the years that follow.

This would be big news for New York City, where the population of adults over 65 is on the rise; it grew more than 19 percent from 2005 to 2015 alone, according to the city Comptroller’s Office. A boost in Social Security benefits would be a relief to many New York seniors, whose incomes are increasingly swallowed up by housing costs — 6 out of 10 spend more than 30 percent of their income on rent — and who increasingly must work to make ends meet. The number of working seniors grew by 62 percent between 2005 and 2015.

Due to the decline in private-sector pension funds, rising healthcare costs and the difficulty of amassing personal savings in an economy with slow or no wage growth, 50 percent of working-age households are at risk of being unable to maintain their standard of living in retirement — up from 30 percent 20 years ago, according to the Center for Retirement Research at Boston College.

Not surprisingly then, Medicare for All is also finding sponsors in Congress. But the odds of Social Security expansion becoming reality may actually be somewhat better than for extending government-sponsored healthcare to the entire working population because there are fewer competing proposals and therefore less controversy over how to do it.

That’s partly thanks to lawmakers like Sanders and Larson and advocacy groups like Social Security Works, which have been working on proposals to make Social Security a more generous system for years and quietly building support for a core set of features. Adding momentum are the cohort of younger, more progressive lawmakers elected last fall.

Thanks are also owed, in a backhanded way, to Trump and Republican Senate Majority Leader Mitch McConnell. Trump rendered protecting Social Security a much bigger issue when, after pledging to leave the program alone during his presidential campaign, his 2018 budget proposed cutting Disability Insurance, which is part of Social Security. McConnell shot down talk in the Senate of “saving” Social Security by cutting benefits on the grounds that it would be political suicide.

Millennial anxieties

That helped open the door for a more robust effort to improve Social Security. Larson’s bill would boost old-age benefits for everyone by about 2 percent of the average benefit, increase the minimum benefit for people who worked in low-wage jobs most of their careers and adjust the benefits formula to better reflect the expenses the elderly actually face in retirement — higher healthcare costs, for example. To pay for this, the bill would raise the cap on earnings subject to Social Security payroll tax, currently $132,900 per year and gradually raise the payroll tax rate to 14.8 percent from the current 12.4 percent over the next 24 years.

In other words, Larson would pay for his expanded benefits by raising taxes — for decades a non-starter not just for Republicans but for the center-right Democratic establishment. That’s a radical shift.

One reason such ideas are becoming acceptable now may be changing attitudes among younger voters, especially millennials. “They’re the first generation that’s lived their entire career in a world of insecurity and constant change,” Jessica Fulton, director of economic policy at the Joint Center for Political and Economic Studies, said in January at the annual policy conference of the National Academy of Social Insurance.

A survey by the accounting firm EY, unveiled at the conference, found that 71 percent of millennials — people born after 1981, who now make up more than one-third of the total workforce — are worried that they will not have enough money to retire on.

Will social insurance lead to new programs that answer to working people’s needs today?

Those worries may be reflected in the politics of Alexandria Ocasio-Cortez and other new members of Congress, which suggests why they’re not afraid to endorse measures that would raise taxes and expand social obligations to working households. It also suggests new enthusiasm for the basic idea underlying both Social Security and Medicare Part A (hospital insurance): social insurance.

Social insurance programs aren’t government programs in the usual sense. They aren’t paid for out of the annual federal budget, but out of taxes that are specially earmarked for them. They also are not means-tested: they cover everybody in the workforce, regardless of income level. That makes them partially immune to Washington’s periodic attacks on “welfare” programs targeted at lower-income and disadvantaged groups. Raising payroll taxes to expand Social Security means that more money goes into a self-financing program that’s owned by the people who pay into it and receive its benefits.

Support for caregivers

Is social insurance the key to reversing the tide in Washington, which has run against poverty reduction and shared obligation for decades now? Will it lead to new programs that answer to working people’s needs today?

Another idea discussed at the National Academy of Social Insurance conference is the creation of the first new social insurance program in the United States since Medicare was passed in 1965. Called Universal Family Care, it’s being promoted by Caring Across Generations, the national caregiving advocacy group. It’s designed to provide support for family caregivers who are burdened with providing for elderly family members — often at the same time they are bringing up children — and to give paid home care workers a better deal. Caring Across Generations is promoting it at the state level initially. The first ballot initiative to enact the plan was rejected in Maine last November, but supporters have vowed to push it in the state’s legislature this year.

Universal Family Care would include universal child care, as well as home care for seniors and the disabled, plus paid family leave. For care workers it provides a 50 percent wage and benefit increase, new quality standards and payroll check-off to form worker advocacy organizations.

Paying for the new program would be an additional payroll tax on incomes above the Social Security earnings cap, amounting to 6.2 percent each for employers and employees. This would also be applied to non-wage income such as stock dividends through a “worker solidarity tax.” Other contributions would come from federal appropriations like Head Start, Temporary Assistance for Needy Families and Medicaid. But, like Social Security and Medicare Part A, the benefits would not be means-tested.

“I hope [Universal Family Care] will stimulate efforts at the state and eventually at the federal level,” said Indivar Dutta-Gupta, co-executive director of the Georgetown Center on Poverty and Inequality, in part because caregiving is one need that simply can’t be solved through the free market. “You can’t offshore it and nobody wants a robot to take care of [seniors]. The answer is a substantial public investment.”

There’s no telling how far Social Security 2100, Medicare for All and Universal Family Care will go in the months between now and the next presidential election. But at the moment, social insurance has a chance to build momentum to expand the social safety net for the first time in generations.